A recent report estimated that over 260,000 people are now running their own online businesses in the UK, selling everything from printer cartridges to pet supplies to plants. Nadeem Azam of Azam Marketing interviews one such entrepreneur, Waheed Ahmad, from Leeds who runs Hibba's Toys. We ask him about what it is like to start up an e-commerce business, the trials and tribulations of going it alone, and what advice he would offer to other people looking to follow in his footsteps.
Waheed, what were you doing before you started Hibba Toys?
I am a qualified Chartered Accountant and was employed by a company. I became a Chartered Accountant to gain an insight into business and always wanted to establish my own company, which I could manage longer term.
What made you start your own business?
When it was my daughter’s first birthday I was searching for a totally unique and distinctive toy or gift. I found this hard to find and searched the major High Street stores and various internet sites. I wanted something personalised that my daughter Hibba could keep and treasure in years to come.
The company started with only three products and today we have a range of over 500 kids' toys and gifts. All of our products are carefully selected and make ideal birthday presents or Christening gifts.
How much research did you do beforehand and why did you decide to set up an online toy shop?
I searched various websites and attended trade fairs in London and Birmingham to find suitable suppliers and unique high quality products. My wife and I sought the products and researched day and night to ensure that we had something different to offer compared to other shops and internet sites. I recall staying up until 3am many times, working from my bedroom while my wife was trying to get me to shut down the computer and get some sleep!!
Overall I would say I did about three months of research, while managing a full time professional job. A lot of hard work, which has now shown its rewards.
Why did you call it ‘Hibba’s Toys’?
Hibba is my daughter’s name. I wanted to call the company after her name. My intention is to grow the company to such a level and then pass it to Hibba to run when she is older.
Did you consider setting up a ‘real world’ toy shop instead? Why did you decide against it?
We actually did open a shop in York. However, we found that although people loved our unique toys, they often went away and would search for the same products on the internet in order to find them at a lower price.
For this reason we decided to close the shop and focus purely on our website. I definitely think that the internet is the way forward and we are therefore doing our best to make the most of it and offer the best choice to our customers at an affordable price.
How did you go about creating a website?
At first I was a little reluctant to open a website. I started off by just trading locally and advertising in newspapers in Leeds. I thought that by having a website I was perhaps doing too much too soon. However, I knew a friend from work and he helped me establish the website. I designed the layout and he implemented it via the software.
I took a look at various websites and found that many of them were just too difficult to use. I often had difficulty finding a product as many sites were not very well laid out. I wanted a site that looked good and was easy to use. I created just that. Not one of my customers has ever said that they dislike the site. Many have praised the site and enjoy using it as it is good to look at and very easy to use.
How do you market your website?
At first I started using Google Adwords, which I must say did work but was rather expensive. I then came across a website optimisation company and paid them to work on an optimisation package in order to achieve listings in the natural pages of Google, MSN and Yahoo. I was also put in touch with Azam Marketing in London who are have a lot of experience in online marketing and they have helped me a great deal. They have done some brilliant work submitting the site to various directories and also undertaking a link building campaign.
Have you heard about affiliate marketing?Yes I have. I have heard the term affiliate marketing and it involves making money through selling other people's products via your means and earning commission for doing so.
Has affiliate marketing been something you have considered for your store?We already do something similar. I offer our products to other people in the trade on a drop-ship basis. They use my pictures to promote the products and then, when they makes sales, I pay them.
Interesting. If somebody wanted to get into the toy business, would you willing to take on board more 'affiliates' on such a basis?Wes, we would be willing to consider that. They would have to take the orders and then send the customers' details to us.
How many hours do you work a week?
I currently work around 70 hours a week and I enjoy everyone minute of it as I know that I am building something that will do well in the near future. I consider the time I work as a long term investment and hence do not perceive it as “work”
How do you mail out the toys?
We have a contract with a courier called ANC. They collect from our premises every day and deliver direct to our customers. We package all our toys in our own warehouse and can keep track of the parcel to ensure it reaches our customer in time.
Why would somebody want to shop at Hibba’s Toys rather than ToyrUs or one of the other major online toy retailers? What distinguishes you from your competitors?
We are totally different to the major High Street retailers. Firstly, we do not sell plastic toys as these are perceived as “cheap” and break very easily. We provide quality wooden and traditional toys that the major retailers do not offer. Our market is at the luxury end and all our toys are designed to last generations and become keepsakes and mementos.
We also offer many personalised gifts and toys, just to add that special touch. Our toys are unique in character and style and for this reason we are successful.
We also offer the best level of customer service. Many of our customers are amazed at our exceptional service as we go more than the extra mile to ensure that all our shoppers are happy with their purchase. We generate repeat business as a result of our commitment to excellence and very high quality standards.
Three-quarters of small businesses fail within the first five years. What strategies have you employed to ensure that Hibba’s Toys bucks the trend?
As a Chartered Accountant, I know too well how businesses fail. The main reason is lack of cash, not profit. Many businesses run out of cash due to poor buying decisions, excess levels of stock that has become redundant, or too high a level of expenses.
I operate the company by taking very little trade credit and only using our own cash. We do not fall into the trap of taking credit and then finding that we cannot pay our suppliers. We always test the market with new products and where possible have arrangements with our suppliers to order in smaller quantities until we are confident that a product is performing well.
We also keep company expenses to a minimum. We want to grow our company but by being risk averse. Many companies take out huge loans to finance working capital and often fail. We do not believe in taking out loans of this nature as we believe in growing at a slow pace. For this reason I believe that Hibba Toys will do well in the future.
Coming from an accountancy background, how do you handle the tax side of your business? Do you think it is possible for people who have not studied accounts to do their own paperwork or would you recommend they hire an accountant?
As a Chartered Accountant I am in a beneficial position as I can do my own accounts and tax affairs. Having the accounting and tax knowledge is helpful as it can be expensive hiring an accountant. I have also found that by having this specialist knowledge I can run my business more efficiently.
I would recommend that anyone who does not have any tax or accounting knowledge should have an accountant to guide them through the book keeping requirements and especially the tax side of the business, as this can be quite complicated.
What has been the most difficult part of running your own online business?
I would say that this has been getting listed on the major search engines like Google. Setting up a site is relatively easy but achieving page one listings is very difficult due to the level of competition! However, we are beginning to overcome this hurdle now and shall soon see more of our results on the first pages of Google.
With the benefit of hindsight, would have done anything differently?
Yes, I would have set up the business earlier so that it would have been more established now. I would also have learnt more about online advertising and search engine optimisation techniques, as many companies have tried to “take me for a ride”.
What do you see as being the weakness of Hibba's Toys? What would you like to improve?
Not being able to get listed prominently on Google. I know that as soon as we get listed we will do well.
Google Adwords has been forcing advertisers to increase their Pay-Per-Click bids. How has this affected you?
We have now withdrawn Google Adwords as it was very expensive. We were paying £600 per month but this was not generating enough business to justify this level of monthly expenditure. We now rely on business from the natural pages of MSN and Yahoo.
What advice would you provide to other people looking to start their own business selling things over the internet?
I would say research your market very carefully and ask yourself why would people buy from you?
Commitment to succeed is essential. You need long term ambition and drive as it is usually not possible to make money in the short term.
Having worked for others and run your own business, what are the pros and cons of each type of employment?
Working for yourself is the best, providing you are making money. If you want to get rich then you will have to work for yourself, there is no doubt about that. You will never ever be rich working for someone else!!
Working for someone has the advantage of being paid on time and holiday entitlement. You will not get this working for yourself. However, just by having your own business does not mean you will become a millionaire. Look at how many businesses there are in the UK. How many are making millions? Only a handful.
What plans to do you have for the future of your business?
I wish to grow the business to such a level that Hibba Toys becomes a household name in the UK. I am confident that we can achieve this through our continued excellent customer service and high quality unique products.
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